New Delhi, Apr 18 (UNI) The Union Cabinet today approved writing off the accumulated losses of Rs 278.44 crore, of the United Bank of India (UBI), and return of equity share capital of around Rs 700 crore by the bank to the government.
Losses of UBI amounting to Rs 278.44 crore as against the capital of Rs 1810.87 crore will be written off with effect from 31 March, 2006, Minister of science and technology Kapil Sibal told reporters after the meeting.
The cabinet has also given its approval for converting a portion of the remaining equity share capital of around Rs 832.43 crore of the United Bank into preference share capital.
The exact amount to be converted will be decided in consultation with UBI and the Reserve Bank of India (RBI).
This decision of the cabinet will enable UBI to strengthen its balance sheet, facilitate adoption of Basel II, create Investment Fluctuation Reserve (IFR) as per RBI guidelines, meet the future capital requirements through IPO and facilitate linkages with foreign banks.
In the past the government has permitted 13 banks including Punjab National Bank, Bank of India, Canara Bank and Indian Overseas Bank, to write off their accumulated losses against capital, when they were fully owned by the government.
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